UK Treasury Committee Told Dutch Example Not Reliable for Black Market Gambling Claims

The UK Parliament’s Treasury Committee heard on Tuesday that the Netherlands cannot be used as a credible case study to suggest gambling tax increases drive players toward the black market. Speaking before MPs, Carsten Jung, interim associate director for economic policy and AI at the Institute for Public Policy Research (IPPR), said that while raising taxes can generate substantial revenue, it is not a stand-alone solution to problem gambling.

Jung appeared as part of the first expert panel called to give evidence to the committee, explaining that the IPPR had advised the government in August to raise the remote gaming duty from 21% to 50% and the machine games duty from 20% to 50% of operator profits. The think tank estimated that these measures could deliver an additional £3 billion ($4 billion) in annual tax revenue.

“Gaming machines and remote betting are fairly sort of sticky. You can raise the tax more and raise more money, but it also means not everyone will be deterred by higher rates or poorer odds,” Jung told MPs. “And therefore, on its own, I would argue it’s not a sufficient policy to address problem gambling.”

His comments came in response to former industry figure and Paddy Power co-founder Stewart Kenny, who told the committee that “higher-risk” gambling products should face heavier taxes “to disincentivise bookmakers from sucking [players] from sportsbook into the online casino.”

Pressed by MPs on whether higher taxes could push gamblers into the black market, Jung dismissed suggestions that the Netherlands provides evidence for that claim. The Dutch market raised its gambling tax in January as part of a phased increase, and reports in August indicated that the hike might create a €200 million shortfall in the national budget, as overall tax revenue from gambling was falling. The country’s regulator, Kansspelautoriteit (KSA), also revealed that this year, for the first time, black market gambling expenditure had surpassed spending in the regulated market.

“That is an example that [the industry] will use, but it’s the only example they will use,” Jung said. “In the Netherlands, not only did they introduce tax, they did a whole load of other regulatory changes as well, which we are not proposing.”

He pointed out that the Netherlands’ complex legal framework makes enforcement against unlicensed operators particularly challenging. “Fortunately, we don’t have that in this country. We are much better and we’re seen as world leaders when it comes to tackling this sort of black-market site,” he added.

To further illustrate his point, Jung cited Estonia as evidence that taxation levels and black market activity are not directly linked. “Estonia, lower tax, lower share of legal market. One of the problems we have in this area is that it’s very hard to measure, because you’re trying to measure something that’s a criminal activity, so notoriously, it’s always hard to measure,” he explained.

A second panel later heard from Betting and Gaming Council (BGC) chief executive Grainne Hurst and BGC tax committee chair Stephen Hodgson, who discussed how potential increases to the remote gambling duty could affect the retail sector.

In recent weeks, several UK operators have warned that they may be forced to close high-street betting shops if remote gambling taxes rise. Hurst told MPs that operators view their online and retail divisions as part of a single financial structure, meaning that any increase in online taxation would inevitably affect their brick-and-mortar operations.

She said that companies would likely need to reduce spending elsewhere in their businesses to absorb the impact. “Companies operate as a single profit-and-loss model and therefore any impact to the online sector through increased remote gaming duty would inevitably impact their retail businesses,” Hurst explained. “Operators would likely have to pull back investment from other parts of their business.”

The session reflected growing political debate over whether higher gambling taxes can effectively balance social responsibility and fiscal goals without driving activity underground or destabilizing legitimate operators in the UK market.

By fLEXI tEAM